Private Equity News & Analysis

BVCA steps up pace on disclosure

The UK industry association has set up an internal body to look into a new framework governing valuation guidelines.

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The British Venture Capital Association (BVCA) has set up a so-called Working Party to look into issues surrounding valuation and reporting guidelines.

According to Edmund Truell, BVCA chairman and chief executive of Duke Street Capital, the aim is to produce an internationally accepted set of guidelines by the middle of next year that will facilitate 'regular reporting, greater openness of information, comparability and consistency.'

The move, which the BVCA says will involve consultation with relevant parties across Europe including private equity firms, investors, the European Venture Capital Association and accountants, is part of a more fundamental effort to introduce to the private equity industry a greater degree of public disclosure of information.

Truell is part of a growing number of practitioners who believe it essential for the industry to voluntarily move to greater transparency to make private equity as an asset class more accessible to investors. In a recent interview with PrivateEquityOnline, Truell said that whilst regulatory bodies such as the Financial Services Authority had not yet shown much interest in the reporting practices of private equity firms, it was a certainty that this would change. “It is important for the industry to be seen as controlling the agenda before somebody else does”, he said.

Commenting on the same issue, another BVCA member also stressed the importance of the industry’s actively setting the pace for the debate on valuation standards. “Full disclosure is going to happen in private equity sooner or later, but if it is legislated for by outsiders, it will be legislated for ineptly”, he predicted.

According to sources, the BVCA’s membership is currently locked into a stalemate over the issue, with 50 per cent supporting Truell’s views and 50 per cent taking a more conservative stance on the issue.

The BVCA’s working party is chaired by Michael Queen, the vice chairman of the BVCA and finance director of 3i Group Plc. Michael Mills, also of 3i, will also sit on it, as will the BVCA’s John Mackie and Jennifer English.